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Competitors on the Court, but Economic Teammates

LEXINGTON, Ky. — The rivalry between Kentucky’s two best college basketball teams, which will face off in the N.C.A.A. semifinals on Saturday night, is nothing short of a state civil war. Team flags are flying from car windows, mayors have wagered, and a brawl between two fans, one of them hooked up to a dialysis machine, had to be stopped by the police.

But behind the competition on the court, there is a new collaboration in the economy. The mayors of the teams’ cities — Jim Gray in Lexington and Greg Fischer in Louisville — are using their positions to persuade their cities, long at odds, to cooperate.

The effort came from a conversation the mayors had at a basketball game shortly after they were elected in 2010: How do you compete in an age of adapt-or-die economics, when China and India are far bigger threats than the neighboring county?

The answer, they say, is to join forces and become a kind of super-region that will draw talented people from around the world and will be able to hold its own in a competitive global marketplace. It is a particularly urgent task now for local leaders, when the federal government is mired in political deadlock and state governments are broke.

“We need to collaborate domestically to compete globally,” said Amy Liu, co-director of the Metropolitan Policy Program at the Brookings Institution, which is helping to guide the effort in Kentucky. “U.S. cities are competing against rapidly rising markets in Asia, South America and parts of Eastern Europe. They cannot afford to compete against each other.”

Successful economies are increasingly regional, Ms. Liu said. They grow by clustering around universities, companies and skilled people who invent things.

The mayors want to start that sprouting process in the Lexington-Louisville region. They want to create a new brain hub (think Silicon Valley in California and the Research Triangle in North Carolina) whose focus would be inventing and making things in high-tech manufacturing plants.

“Lexington and Louisville had always been fighting, but we’ve got to get beyond that,” Mr. Fischer said in an interview. “The way to get more pie is to make more pie, not to fight over the slice that’s in front of us.”

Mr. Fischer, 54, and Mr. Gray, 58, come from backgrounds that seem to have prepared them for the challenge. Both are businessmen from families of F.D.R. Democrats. Both grew family businesses beyond the borders of the United States — Mr. Fischer by inventing an ice and beverage dispenser and Mr. Gray by building specialty factories for foreign manufacturers in the United States.

President Obama has emphasized high-tech manufacturing as a potential engine for growth in the economy, but some economists argue that the focus is misplaced. Manufacturing has been shrinking as a share of the economy for years, and the economists say that is something best done in cheaper labor markets.

Photo

Lexington's mayor Jim Gray, left, and Louisville's mayor, Greg Fischer, outside their respective offices. The two, elected on the same day in November 2010, and both Vanderbilt alumni, are collaborating to create a super-region model linking the two cities, and strengthening their economies.Credit
Chris Wilson for The New York Times

“Even if we do manage to do great things in terms of high-tech manufacturing, that’s unlikely to lead to high levels of jobs for Americans in the middle of skill distribution,” said Edward Glaeser, an economist at Harvard and the author of “Triumph of the City.” “That’s the enormous challenge that we face in this country.”

The aim may be ambitious, the mayors say, but it is not such a stretch, considering the large ecosystem of production that is already here — Toyota’s North American headquarters, Raytheon, two Ford plants and a General Electric manufacturing plant. The cities are roughly 80 miles apart, and the region, around 20 northern Kentucky counties, produces nearly half of the total economic output of the state’s 120 counties.

Still, the region has lagged in research and development and has a long way to go before becoming a hub of innovation, which is at the heart of the most successful American cities, said Kenneth Troske, a professor of economics at the University of Kentucky in Lexington.

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The key is education, Professor Troske said, an area in which the state has lagged badly. These northern metro areas, with their big universities, have high levels of education, but they are islands in a state that ranks 47th in terms of share of adults with a college degree.

This is important because the work force will come from the rest of the state.

“In education, we’re flat and at the bottom,” he said. “That has to be front and center moving forward, whatever industry we want to attract. We have to have a large majority of our kids getting some kind of post-secondary degree.”

The mayors acknowledge that and say it will take a concerted effort by local government, business leaders, universities and civic organizations to accomplish it. That is what the project, which they call the Bluegrass Economic Advancement Movement, is designed to do.

“Government is a good convener,” Mr. Fischer said. “It can bring people together and let the market solve the problem.”

Mr. Gray points to Germany as a model, where college students work on factory floors as well as study at technical colleges in a deliberate state policy to develop a skilled work force. Such collaboration already exists between Toyota and a local community college here, Mr. Gray said, but it needs to expand to smaller companies.

“This is so much more meaningful than just recruiting the next Toyota,” Mr. Gray said. “Toyota is the holy grail, and we’ve got it. It’s how you leverage it.”

The project is still in early stages. Researchers are analyzing the region’s economy and making a master map of its features.

But Mr. Gray said the economy is ripe for change. Argonne, the Energy Department laboratory that contributed technology to the Chevrolet Volt plug-in hybrid, is opening a battery research and development center in Lexington this year in a partnership with the two universities.

“Anyone who waits for the phone to ring and someone to bring them a bunch of jobs, well that model doesn’t work anymore,” Mr. Gray said.

A version of this article appears in print on March 31, 2012, on Page A10 of the New York edition with the headline: Competitors on the Court, But Economic Teammates. Order Reprints|Today's Paper|Subscribe